2008-08-04 15:01:00
SuperGen Reports 2008 Second Quarter Financial Results
Quarterly Dacogen Royalty Revenue Increases 76% from Same Prior Year Period
DUBLIN, Calif., Aug. 4 /EMWNews/ -- SuperGen, Inc.
(Nasdaq: SUPG), a pharmaceutical company dedicated to the discovery, rapid
development and commercialization of therapies for solid tumors and
hematological malignancies, today announced financial results for the
second quarter and six months ended June 30, 2008.
Total revenues for the 2008 second quarter were $8.1 million, compared
with $4.6 million for the same prior year period. Total revenues for the
2008 second quarter and same prior year period consisted entirely of
royalty revenue. Royalty revenue is earned pursuant to the license
agreement entered into with MGI PHARMA (acquired by Eisai Co., Ltd. in
January 2008) during 2004, which granted MGI PHARMA exclusive rights to the
development, manufacture, commercialization and distribution of Dacogen(R)
(decitabine) for Injection. The Company recognizes royalty revenue on a
cash basis when it is received.
Excluding gain on sale of products, total costs and operating expenses
for the 2008 second quarter were $11.0 million, compared with $19.6 million
for the same prior year period. The primary reason for the decrease in
total costs and operating expenses for the 2008 second quarter were lower
acquired in-process research and development costs, a reduction in general
corporate expenses and lower stock-based compensation expense offset in
part by higher research and development costs related to increased product
development activities including ongoing clinical operations and accrual of
estimated severance costs in the amount of $322,000 related to the
anticipated closure of our European operation later this year. Closure of
the European operation is anticipated to reduce operating expenses in
future periods up to $1 million annually. Stock-based compensation expense,
which is included in operating expenses, was $670,000 for the 2008 second
quarter, compared with $1.1 million for the same prior year period.
The gain on sale of products for the 2008 second quarter was $560,000
compared with $25.8 million for the same prior year period. The gain on
sale of products for the 2008 second quarter represents the receipt of an
annual payment in the amount of $400,000 paid by Mayne Pharma (acquired by
Hospira, Inc. in February 2007) related to the sale of Nipent(R)
(pentostatin for injection) and the reversal of a residual product returns
reserve for Nipent no longer required due to the expiration of the
contractual return period in the amount of $160,000. The gain on sale of
products for the same prior year period related primarily to the sale of
Nipent and SurfaceSafe(R) representing the initial recognition of the
deferred gain on sale of products to Mayne Pharma and also the recognition
of gains on the sale of other products to Intas Pharmaceuticals.
Loss from operations for the 2008 second quarter was $2.3 million
compared with income from operations of $10.9 million for the same prior
year period. The Company reported a net loss for the 2008 second quarter of
$4.9 million, or $0.08 per share, compared with net income of $11.1
million, or $0.19 per share, for the same prior year period. The net loss
for the 2008 second quarter includes a non-operating charge of $3.1 million
that reflects an other than temporary decline in value in the Company's
equity investment in AVI BioPharma. There was no similar non-operating
charge in the same prior year period.
Total revenues for the six months ended June 30, 2008 were $16.3
million, compared with $9.0 million for the same prior year period. Total
revenues for the six months ended June 30, 2008 consisted of $16.3 million
in royalty revenue, compared with $8.4 million for the same prior year
period. Royalty revenue is earned pursuant to the license agreement entered
into with MGI PHARMA. The Company recognizes royalty revenue on a cash
basis when it is received. There was no net product revenue for the six
months ended June 30, 2008, compared with $621,000 for the same prior year
period. The decrease in net product revenue during 2008 is due to the sale
of the Company's worldwide rights for Nipent to Mayne Pharma in a prior
period.
Excluding gain on sale of products, total costs and operating expenses
for the six months ended June 30, 2008 were $22.0 million, compared with
$28.5 million for the same prior year period. The primary reason for the
decrease in total costs and operating expenses for the six months ended
June 30, 2008 were lower acquired in-process research and development costs
and a reduction in stock-based compensation expense offset in part by
higher research and development costs related to increased product
development activities including ongoing clinical operations and accrual of
estimated severance costs related to the anticipated closure of our
European operation later this year. Stock-based compensation expense, which
is included in operating expenses, was $1.4 million for the six months
ended June 30, 2008, compared with $2.3 million for the same prior year
period.
The gain on sale of products for the six months ended June 30, 2008 was
$1.6 million compared with $25.8 million for the same prior year period.
The gain on sale of products for the six months ended June 30, 2008
represents the receipt of multiple payments totaling $1.4 million paid by
Mayne Pharma that related to the sale of Nipent and SurfaceSafe and the
reversal of a residual product returns reserve for Nipent no longer
required due to the expiration of the contractual return period in the
amount of $160,000. The gain on sale of products for the same prior year
period related primarily to the sale of Nipent and SurfaceSafe representing
the initial recognition of the deferred gain on sale of products to Mayne
Pharma and also the recognition of gains on the sale of other products to
Intas Pharmaceuticals.
Loss from operations for the six months ended June 30, 2008 was $4.2
million compared with income from operations of $6.4 million for the same
prior year period. The Company reported a net loss for the six months ended
June 30, 2008 of $5.9 million, or $0.10 per share, compared with net income
of $7.7 million, or $0.14 per share, for the same prior year period. The
net loss for the six months ended June 30, 2008 includes a non-operating
charge of $3.1 million that reflects an other than temporary decline in
value of the Company's equity investments. There was no similar
non-operating charge in the same prior year period.
As of June 30, 2008, the Company had approximately $87.6 million in
current and non-current unrestricted cash, cash equivalents and marketable
securities.
2008 Revised Annual Financial Guidance
The Company has not changed significantly its annual financial guidance
from the 2008 first quarter conference call. Selected elements of our
revised annual financial guidance include the following:
-- Royalty revenue for 2008 remains unchanged and is forecasted in a
range from $32 million to $35 million.
-- Research and development expenses remain unchanged for 2008 and are
expected to total approximately $34 million to $36 million.
-- Selling, general and administrative expenses have been reduced
slightly from the previous annual guidance and are expected to total
approximately $13 million for 2008.
-- The Company is forecasting to record a non-cash charge in the amount
of $5.2 million to acquired in-process research and development during 2008
representing a potential milestone payment to the former Montigen
stockholders. This payment made in the form of equity is contingent on the
filing of an Investigational New Drug (IND) application with the Food and
Drug Administration (FDA) of a second drug emanating from the acquired
technology.
-- Additional receipts related to the sale of products to be paid by
Mayne Pharma are anticipated during 2008 in a range from $1.6 million to
$2.6 million. These payments will be classified as gain on sale of
products.
-- Included in total operating expenses for 2008 is a reduced amount
from previous guidance for non-cash stock-based compensation expense
estimated at $3.5 million annually.
-- Based on the revised 2008 financial guidance loss from operations is
estimated in a range from $16.6 million to $18.6 million.
-- Revised weighted average shares outstanding for 2008 are estimated
at 58.1 million common shares.
Recent Corporate Events:
-- April 2008: The Company had multiple abstracts accepted for oral and
poster presentation at the American Association of Cancer Research
(AACR) Annual Meeting, that took place April 12-16 in San Diego,
California. Highlights of the presentations are included below:
-- SGI-1776, our lead pre-clinical PIM kinase inhibitor, was found to
cause tumor regression in acute myelogenous leukemia (AML) xenograft
models (Abstract No. 4974). In an oral presentation entitled, "A
potent small molecule PIM kinase inhibitor with activity in cell
lines from hematological and solid malignancies," Dr. Steven Warner,
SuperGen's Manager, Discovery Biology, detailed how scientists used
the Company's CLIMB(TM) technology to build a model that allowed for
the creation of small molecule PIM kinase inhibitors. SGI-1776 was
identified as a potent and selective inhibitor of the PIM kinases,
inducing apoptosis and cell cycle arrest, thereby causing a
reduction in phospho-BAD levels and enhancement of mTOR inhibition
in vitro. SGI-1776 induced significant tumor regression in MV-4-11
(AML) and MOLM-13 (AML) xenograft models.
-- MP-470, an early clinical-stage multi-targeted tyrosine kinase
inhibitor and Rad51 suppressor, was shown to be bioavailable and
well-tolerated in a first in human study (Abstract No. 4083). The
presentation entitled, "MP-470, a potent oral Rad51 suppressor is
safe and tolerable in first-in-human study," summarized the data
suggesting that MP-470 is well-tolerated when administered in doses
of up to 900 mg per day. Additionally, it was found that Rad51
expression is modulated in a dose-dependent manner. This is
consistent with pre-clinical studies where MP-470 was shown to
sensitize cancer cells to DNA damaging agents and radiation therapy
by suppressing Rad51, a protein responsible for repair of double
strand DNA breaks in cancer cells.
-- MP-470 was shown to effectively sensitize prostate and breast cancer
cells to erlotinib (Abstract No. 671). The presentation entitled,
"Inhibition of erlotinib resistance on HER-family tyrosine kinases
by combination with MP-470, a multi-targeted TK inhibitor in
prostate and breast cancer," highlighted data suggesting that the
combination of MP-470 and erlotinib inhibits the binding of the p85
subunit of PI3K. The poster outlined the enhanced impact of the
combination of MP-470 and erlotinib, compared to either agent alone
in reducing phosphorylation of Akt, ERK1/2, EGFR/HER1, HER2/Neu, and
HER3.
-- S-110, a DNA methyltransferase inhibitor, demonstrated an improved
in vivo activity profile over decitabine (Abstract No. 2613). The
presentation entitled, "Decitabine administered as a Dinucleotide
prodrug increases its in vivo efficacy due to enhanced drug delivery
and stability," highlighted data indicating that S-110 showed robust
anti-tumor activity in prostate and cisplatin-resistant ovarian
carcinoma xenograft models. Additionally, S-110 restored sensitivity
to cisplatin in the ovarian cancer model. Reduced toxicity was
observed along with an increased half-life compared to decitabine.
-- June 2008: The Company had two abstracts accepted for oral and poster
presentation at the 13th Congress of the European Hematology
Association (EHA) that took place June 12-15, 2008 in Copenhagen,
Denmark. Highlights of the presentations are included below:
-- SGI-1776, an oral PIM kinase inhibitor, causes tumor regression in
acute myologenous leukemia (AML) xenograft models (abstract #744).
In a poster presentation entitled "A potent small molecule PIM
kinase inhibitor with in vivo oral availability and activity in cell
lines from hematological malignancies," Dr. Gregory Berk, SuperGen's
Chief Medical Officer, detailed how scientists used the CLIMB
technology to build a model that allowed for the creation of small
molecule PIM kinase inhibitors. SGI-1776 was identified as an
orally available, potent and selective inhibitor of the PIM kinases.
SGI-1776 induces cell cycle arrest, dose dependent apoptosis and a
reduction in phospho-BAD levels in leukemia and lymphoma cell lines.
Phospho-BAD is a direct substrate for PIM, and may serve as a useful
in vivo biomarker for future clinical trials. Most notably,
SGI-1776 induced significant tumor regression in MOLM-13 (AML) and
MV-4-11 (AML) xenograft models.
-- SGI-1252, the Company's JAK2 kinase inhibitor, inhibits tumor cell
proliferation in vivo (abstract #741). In an oral presentation
titled "SGI-1252: A Potent Small Molecule JAK2 Inhibitor," Dr.
Steven Warner, Manager of Discovery Biology, highlighted how
SuperGen scientists used the Company's CLIMB technology to identify
SGI-1252 as a possible JAK2 inhibitor. Dr. Warner presented data
indicating that SGI-1252 selectively inhibits wildtype and mutant
JAK2 activity in cancer cell lines, resulting in inhibition of STAT5
phosphorylation as well as a reduction in Bcl-XL expression.
SGI-1252 was also shown to inhibit tumor growth in mouse xenograft
models. Pharmacokinetic studies suggest that SGI-1252 is orally
bioavailable.
-- July 2008: The Company commented on the preliminary data from a Phase
3 trial, initiated in 2002, comparing Dacogen to best supportive care
(BSC) in elderly patients with myelodysplastic syndromes (MDS). The
data did not demonstrate a statistically significant advantage of
Dacogen treatment on median survival compared to BSC, the primary
endpoint of the study. However, response rates were similar to those
observed in other clinical trials of Dacogen in patients with MDS. The
trial, conducted by the European Organisation for Research and
Treatment of Cancer (EORTC), administered Dacogen on a three-day dosing
schedule in which the number of treatment cycles was limited. MDS is a
potentially life-threatening group of bone marrow diseases that limit
the production of functional blood cells. Subsequent to database lock
and the completion of data analysis, comprehensive results of the
study, including secondary efficacy endpoints and safety data, will be
presented by EORTC at an upcoming scientific forum.
Conference Call Information
SuperGen will host a conference call to discuss the results of the 2008
second quarter financial results today at 1:30 p.m. PT / 4:30 p.m. ET. The
webcast will be accessible via the Investor Relations section of the
Company's Web site at http://www.supergen.com. A webcast replay of the live
conference call will be available shortly following the event.
Alternatively, you may access a replay of the conference call by dialing
1-888-286-8010 (domestic) and 1-617-801-6888 (international); replay
passcode number is 85497056. The webcast replay and conference call replay
will be available for 90 days.
About SuperGen
Based in Dublin, California, SuperGen, Inc. is a pharmaceutical company
dedicated to the discovery, rapid development and commercialization of
therapies for solid tumors and hematological malignancies. SuperGen is
developing a number of therapeutic anticancer products focused on kinase
and cell signaling inhibitors and DNA methyltransferase inhibitors. For
more information about SuperGen, please visit http://www.supergen.com.
Forward-Looking Statements
This press release contains "forward-looking" statements within the
meaning of Section 21A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, and is
subject to the safe harbor created thereby. The actual results could differ
materially from those projected in the forward-looking statements as a
result of a number of risks and uncertainties. These forward-looking
statements include statements regarding SuperGen's expectation that it will
receive the balance of the purchase price for Nipent from Mayne Pharma,
expectations regarding the various abilities of MP-470, including its
multi-arm Phase 1b clinical trial, expectations about the efficacy of
S-110, expectations about revenue, gains from sales of non-core assets and
operating expenses, expectations regarding the anticipated reduction in
operating expenses as a result of the anticipated closure of SuperGen's
European operations, expectations regarding the filing of a second IND with
the FDA, as well as SuperGen's expectations and successful development of
all its pipeline products. Important factors that could cause actual
results to differ materially from the expectations reflected in the
forward-looking statements include, but are not limited to, risks and
uncertainties related to the achievement of developmental milestones with
respect to the compounds acquired in the Montigen acquisition, the research
and development of MP-470, S-110 or SGI-1776, the satisfaction of the
contingencies related to the sale of the worldwide rights to Nipent to
Mayne Pharma, and the ability of MGI to generate global sales of Dacogen.
In general, our future success is dependent upon numerous factors,
including our ability to generate pre-clinical development candidates for
selection into clinical testing, obtaining regulatory approval of product
development programs, conducting and completing clinical trials and
obtaining regulatory approval of our products and product candidates, and
creating opportunities for future commercialization of compounds. Our
future revenue and operating and net income or loss could be worse than
anticipated if demand for our products is less than expected, or if the
introduction of new products is delayed, for any reason, including
regulatory delay. References made to the discussion of risk factors are
detailed in the Company's filings with the Securities and Exchange
Commission including reports on its most recently filed Form 10-K and Form
10-Q. These forward-looking statements are made only as of the date hereof,
and we disclaim any obligation to update or revise the information
contained in any such forward-looking statements, whether as a result of
new information, future events or otherwise.
Contacts:
Timothy L. Enns Mary M. Vegh
SuperGen, Inc. SuperGen, Inc.
SVP, Corporate Communications Manager, Investor Relations
& Business Development
Tel: (925) 560-0100 Tel: (925) 560-2845
E-mail: [email protected] E-mail: [email protected]
Condensed Consolidated Statements of Operations and Balance Sheets
to follow ...
SUPERGEN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Revenues:
Net product revenue $- $- $- $621
Royalty revenue 8,133 4,619 16,271 8,413
Total revenues 8,133 4,619 16,271 9,034
Costs and operating expenses:
Cost of product revenue - - - 221
Research and development 7,740 5,953 15,687 11,015
Selling, general,
and administrative 3,273 3,697 6,350 7,273
Acquired in-process
research and
development - 9,967 - 9,967
Gain on sale of
products (560) (25,849) (1,560) (25,849)
Total costs and
operating expenses 10,453 (6,232) 20,477 2,627
Income (loss) from
operations (2,320) 10,851 (4,206) 6,407
Interest income 497 1,040 1,303 1,984
Other than temporary
decline in value of
investments (3,052) - (3,055) -
Other income (expense) (4) 19 9 20
Income (loss) before
income tax provision (4,879) 11,910 (5,949) 8,411
Income tax provision - (833) - (663)
Net income (loss) $(4,879) $11,077 $(5,949) $7,748
Net income (loss) per
common share:
Basic $(0.08) $0.19 $(0.10) $0.14
Diluted $(0.08) $0.19 $(0.10) $0.14
Weighted average shares
outstanding:
Basic 57,542 57,010 57,531 56,237
Diluted 57,542 58,143 57,531 57,087
SUPERGEN, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
June 30, December 31,
2008 2007
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $76,344 $78,055
Marketable securities 8,483 9,375
Accounts receivable, net 3 71
Accounts receivable from Mayne Pharma 11 58
Prepaid expenses and other current assets 1,288 728
Total current assets 86,129 88,287
Marketable securities, non-current 2,733 3,419
Property, plant and equipment, net 4,652 4,435
Goodwill 731 731
Other intangibles, net 319 532
Restricted cash and investments, non-current 2,592 2,536
Other assets 508 508
Total assets $97,664 $100,448
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $2,614 $2,327
Accrued liabilities 247 687
Payable to AVI BioPharma 565 565
Deferred gain on sale of products to
Mayne Pharma 600 600
Accrued payroll and employee benefits 2,350 2,782
Total current liabilities 6,376 6,961
Deferred rent 744 832
Total liabilities 7,120 7,793
Total stockholders' equity 90,544 92,655
Total liabilities and stockholders'
equity $97,664 $100,448
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